United States Steel Corporation Reports 2013 Fourth Quarter And Full-Year Results
-- Total reportable segment and Other Businesses income from operations of $146 million

-- Net loss of $122 million, or $0.84 per diluted share; adjusted net income of $38 million or $0.27 per diluted share, excluding non-cash restructuring and other charges of $302 million, or $2.09 per diluted share, and a favorable tax-related item of $142 million, or $0.98 per diluted share

-- Shipments of 4.9 million tons and net sales of $4.3 billion

-- Total liquidity of $2.3 billion, including $604 million of cash

-- Full-year total reportable segment and Other Businesses income from operations of $400 million

PITTSBURGH, Jan. 27, 2014 /PRNewswire/ -- United States Steel Corporation (NYSE: X) reported a fourth quarter 2013 net loss of $122 million, or $0.84 per diluted share, compared to a third quarter 2013 net loss of $1,791 million, or $12.38 per diluted share, and fourth quarter 2012 net loss of $50 million, or $0.35 per diluted share. Adjusted net income for the fourth quarter of 2013 was $38 million, or $0.27 per diluted share, excluding after-tax non-cash restructuring and other charges primarily related to the shut down of the iron and steelmaking facilities at Hamilton Works of $302 million, or $2.09 per diluted share, and a favorable tax-related item of $142 million, or $0.98 per diluted share. Adjusted net loss for the third quarter of 2013 was $20 million, or $0.14 per diluted share, excluding an after-tax non-cash goodwill impairment charge of $1.8 billion, or $12.24 per diluted share. Adjusted net loss for the fourth quarter of 2012 was $59 million, or $0.41 per diluted share, excluding a favorable settlement of $9 million, or $0.06 per diluted share, related to a supplier contract dispute.

For the full-year 2013, U. S. Steel reported a net loss of $2,064 million, or $14.27 per diluted share, which included a net loss of $2.1 billion primarily due to a non-cash goodwill impairment charge and non-cash restructuring and other charges. For full-year 2012, U. S. Steel reported a net loss of $124 million, or $0.86 per diluted share, which included a net loss of $353 million primarily due to the sale of U. S. Steel Serbia.

Earnings Highlights

(Dollars in millions, except per share amounts)

4Q 2013

3Q 2013

4Q 2012

2013

2012

Net Sales

$

4,269

$

4,131

$

4,487

$

17,424

$

19,328

Segment income (loss) from operations

Flat-rolled

$

87

$

82

$

11

$

105

$

400

U. S. Steel Europe

12

(32)

7

28

34

Tubular

32

49

32

190

366

Other Businesses

15

14

9

77

55

Total reportable segment and Other Businesses income from

operations

$

146

$

113

$

59

$

400

$

855

Postretirement benefit expense

(56)

(55)

(69)

(221)

(297)

Other items not allocated to segments

(319)

(1,760)

15

(2,079)

(311)

Income (loss) from operations

$

(229)

$

(1,702)

$

5

$

(1,900)

$

247

Net interest and other financial costs

75

85

64

332

241

Income tax (benefit) provision

(182)

4

(8)

(168)

131

Less: Net loss attributable to the noncontrolling interests

—

—

(1)

—

(1)

Net loss attributable to United States Steel Corporation

$

(122)

$

(1,791)

$

(50)

$

(2,064)

$

(124)

-Per basic share

$

(0.84)

$

(12.38)

$

(0.35)

$

(14.27)

$

(0.86)

-Per diluted share

$

(0.84)

$

(12.38)

$

(0.35)

$

(14.27)

$

(0.86)

Commenting on results, U. S. Steel CEO Mario Longhi said, "We are on a multi-year journey to earn the right to grow by improving our balance sheet and achieving sustainable profitability. Our fourth quarter results reflect our early efforts on this journey as all segments were profitable and in total, we had an overall improvement in operating results compared to the third quarter."

The $146 million, or $30 per ton, of reportable segment and Other Businesses income from operations for the fourth quarter of 2013 compares to income from operations of $113 million, or $24 per ton, in the third quarter of 2013 and income from operations of $59 million, or $11 per ton, in the fourth quarter of 2012.

Other items not allocated to segments in the fourth quarter of 2013 consisted of non-cash restructuring and other charges of $248 million, or $1.71 per diluted share; an adjustment to our preliminary non-cash goodwill impairment charge of $23 million, or $0.16 per diluted share; a $32 million, or $0.22 per diluted share, environmental remediation charge and a non-cash charge to write-off an equity investment of $16 million, or $0.11 per diluted share.

For the full-year 2013, we recorded a tax benefit of $168 million on our pre-tax loss of $2,232 million. The tax provision does not reflect any tax benefit for pre-tax losses in Canada, which is a jurisdiction where we have recorded a full valuation allowance on deferred tax assets; however, it does include a tax benefit of $142 million associated with the tax provision recorded in other comprehensive income related to the year-end pension revaluation. In addition, essentially no tax benefit was recorded on the $1.8 billion goodwill impairment charge.

As of December 31, 2013, U. S. Steel had $604 million of cash and $2.3 billion of total liquidity.

Reportable Segments and Other Businesses

Fourth quarter results for our Flat-rolled segment were comparable to the third quarter. Average spot and market-based contract prices were higher in the fourth quarter; however, a higher percentage of hot rolled shipments resulted in average realized prices that were comparable to the third quarter. A decrease in raw materials and other costs were offset by an increase of approximately $45 million for facility repairs and maintenance costs due primarily to a blast furnace reline at Gary Works and a planned blast furnace maintenance project at Fairfield Works.

Results for our European segment improved in the fourth quarter and returned to profitability due to higher shipments and lower facility repairs and maintenance costs as a blast furnace outage was completed in the third quarter. Average realized euro-based prices for the majority of our products remained relatively unchanged in the fourth quarter; however, overall average realized prices in the fourth quarter declined compared to the third quarter due to a higher level of hot-rolled shipments.

Fourth quarter results for our Tubular segment decreased compared to the third quarter due primarily to lower shipments and average realized prices as end users decreased drilling activity in order to operate within their 2013 capital budgets and imports persisted at high levels for which a trade case is pending. Inventory management by our customers was also a factor as we approached year-end.

Outlook

Commenting on U. S. Steel's outlook for the first quarter, Longhi said, "We are encouraged by our early progress on the Carnegie Way. We expect total reportable segment and Other Businesses income from operations to increase moderately compared to the fourth quarter."

We expect first quarter results for our Flat-rolled segment to increase primarily due to higher average realized prices and shipments as well as reduced repairs and maintenance costs. Average realized prices and shipments are expected to increase as a result of higher contract and spot market prices and improving end user demand after the fourth quarter holiday down time. Repairs and maintenance costs are projected to decrease as compared to the fourth quarter due to the completion of the projects at Gary Works and Fairfield Works. We will also have reduced idled facility costs after the shut down of the iron and steelmaking facilities at Hamilton Works. Raw materials costs, primarily for purchased scrap, and energy costs are expected to increase.

We expect first quarter results for our European segment to be comparable to the fourth quarter as the benefits of increased average realized prices are offset by an increase in raw materials costs, primarily for iron ore, and other operating costs. Average realized prices are expected to increase compared to the fourth quarter due to a more favorable product mix and an anticipated gradual recovery in the spot market while shipments are expected to remain comparable.

First quarter results for our Tubular segment are expected to decrease as the benefits of reduced operating costs and increased shipments are more than offset by a decrease in average realized prices and an increase in substrate costs. Average realized prices are projected to decrease primarily due to pricing pressures from continuing high import levels and increased domestic supply. Shipments are expected to increase as drilling activity begins to improve.

*****

This release contains forward-looking statements with respect to market conditions, operating costs, shipments and prices. Factors that could affect market conditions, costs, shipments and prices for both North American and European operations include: (a) foreign currency fluctuations and related activities; (b) global product demand, prices and mix; (c) global and company steel production levels; (d) plant operating performance; (e) natural gas, electricity, raw materials and transportation prices, usage and availability; (f) international trade developments, including court decisions, legislation and agency decisions on petitions and sunset reviews; (g) the impact of fixed prices in energy and raw materials contracts (many of which have terms of one year or longer) as compared to short-term contract and spot prices of steel products; (h) changes in environmental, tax, pension and other laws; (i) the terms of collective bargaining agreements; (j) employee strikes or other labor issues; and (k) U.S. and global economic performance and political developments. Domestic steel shipments and prices could be affected by import levels and actions taken by the U.S. Government and its agencies, including those related to CO2 emissions, climate change and shale gas development. Economic conditions and political factors in Europe and Canada that may affect U. S. Steel Europe's and U. S. Steel Canada's results include, but are not limited to: (l) taxation; (m) nationalization; (n) inflation; (o) fiscal instability; (p) political issues; (q) regulatory actions; and (r) quotas, tariffs, and other protectionist measures. We present adjusted net income and adjusted net income per diluted share, which are non-GAAP measures, as an additional measurement to enhance the understanding of our operating performance and facilitate a comparison with that of our competitors. In accordance with "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, cautionary statements identifying important factors, but not necessarily all factors, that could cause actual results to differ materially from those set forth in the forward-looking statements have been included in U. S. Steel's Annual Report on Form 10-K for the year ended December 31, 2012, and in subsequent filings for U. S. Steel.

The company will conduct a conference call on fourth quarter earnings on Tuesday, January 28, at 4:00 p.m. Eastern. To listen to the webcast of the conference call, visit the U. S. Steel website, www.ussteel.com, and click on "Current Information" under the "Investors" section.